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The Transatlantic Free Trade Agreement

Open Trade Between the United States and the European Union

By

The United States and Europe already have a close and deep economic relationship. With the prospects of a Transatlantic Free Trade Agreement between the United States and the European Union, that relationship will only grow at a faster rate and prosper, which could provide additional exporting avenues for your company.

The United States and European Union aim to start negotiating the Transatlantic Free Trade Pact this year. The two top economies hope the pact will revive their respective economies. The goal of the agreement is to cut tariffs, lower trade barriers and ease commerce–thereby setting higher standards for the world to follow. The alliance should help create jobs, spur economic growth and strengthen the transatlantic economic ties.

According to the New York Times, Ron Kirk, the U.S. Trade Representative, says “preliminary discussion between him and top E.U. officials have made ‘very good progress’ on issues that have stymied trade relations for years, like health and safety standards applied to food. A final agreement is possible before the end of 2014.” (Source: nytimes.com).

While polls suggest many Americans have an ambivalent attitude toward trade agreements, a recent Pew poll found that Americans support increased trade with Europe, by a 58 percent to 28 percent margin (source: U.S. Chamber of Commerce).

EU-United States Trade Stats

The EU comprises of 27 nations, with the 28th, Croatia, to join this year. According to the Pittsburgh Post-Gazette, the agreement is an economic win-win for all parties involved. “Any steps the United States can take to give its exports greater access to this market of half a trillion people, many of them well-to-do, is clearly to America's advantage. At the same time, to give European exporters greater access to U.S. markets should enhance competition and lower the costs of many products to consumers here, particularly when the recession is making Americans feel the pinch.” (source: Pittsburgh Post-Gazette)

Trade between the United States and EU countries in 2012 was reported by the federal government to be $646 billion–pushing to nearly $1 trillion.

According to “Forging a Transatlantic Partnership for the 21st Century,” a paper from the Business Roundtable and the Transtlantic Business Dialogue:

“The US and the EU are each other’s most important investment partners, and transatlantic investment flows of nearly $2.7 trillion dwarf those among any other continents. In addition, US and European companies account for 60 percent of the top R&D companies and 69 percent of private R&D spending in the world.”

Benefits of the Transatlantic Free Trade Agreement

As reported by Lexology:

“A transatlantic free trade agreement (FTA) would have a tremendous economic impact. Europe is already the United States’ largest economic partner, with more than $600 billion in annual trade (compared to American trade with China of about $500 billion). A transatlantic FTA would create the largest free trade area in the world, covering approximately 40 percent of global commerce, and could generate more than $5 trillion in trade, investment and sales. According to a study by the US Chamber of Commerce ‘eliminating these tariffs [in a transatlantic FTA] would boost two-way trade by $120 billion within five years’ and add $180 billion to the new bloc’s combined GDP.”

So what does this mean for your exporting business? You’d have the potential to tap into a $5 trillion opportunity. Beyond creating jobs for billions around the world and spurring economic growth, the Transatlantic Free Trade Agreement will boost innovation, improve global competitiveness and ensure long-term economic growth and prosperity.

More information on the transatlantic FTA can be found at:

Transatlantic Economic and Trade Pact, U.S. Chamber of Commerce www.uschamber.com/international/agenda/transatlantic-economic-and-trade-pact

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